Thursday, September 22, 2011

Silver & Gold Update


Here is an update of the daily Silver/Nasdaq 2000 analog from last weeks note (see Here). This chart was created intraday ~ 9:45 EST 9/22. The analog had a target for SLV ~ 36 for this week. I sold my respective ZSL and GLL positions this morning with the expectation that silver and gold should firm in the coming sessions and make one last attempt at a rebound high in the coming weeks.  

To the degree that the markets have been highly correlated coming into the Fall, I would expect the equity indices to also firm in the coming sessions. When these correlations will weaken is anyones guess at this point - but I would expect that a resolution directive on the European front would go a long way to differentiating asset class relationships going forward.

As always - stay frosty. 
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Friday 4:30 Update: As a postscript to this analog, it clearly pulled an audible with regards to the severity of the decline - it was well beyond my expectations. In this regard it failed to help me measure the optimal exit for the move. With that said, broken markets trade along similar emotional arcs - which are expressed in the charts. Work such as this helped me commit to the trade, which still yielded outsized gains.